The economic contours of the 20th century and to an extent social and political as well, were perhaps shaped by 3 phenomena: Capitalism, Consumerism and Globalization. An eventful beginning to the 21st century, especially the last three years, makes sure that the triad remains relevant, albeit with one rider. While the current economic order has its roots in the universal glorification of the ideas behind the triad, the recent skepticism and disdain for the triad, is perhaps turning out to be a pre-cursor for a new economic order that will be synonymous with the 21st century.
Capitalism - The oldest of the troika, conceptualized perhaps in second half of the 19th century, gained prominence in early 20th century, broadly signifies that means of production are privately owned and the investments are made with sole aim of deriving maximum profits out of them. Despite its fallacies and being challenged by Communism, it thrived. It was the Great recession of 2008-09 which finally shook the very foundations of Capitalism - the concept of a free market economy and that of Laissez Faire. In the world's foremost free economy, where prices were supposedly determined by supply and demand and on rational behavior of market participants - it led to creation of asset bubbles which when burst, brought the whole economy to a standstill. Similarly, laissez-faire - the concept of minimal government intervention in the markets - was conveniently and blatantly forgotten when businesses facing pressing needs for capital were bailed out by the sovereign by pumping in trillions of dollars through stimulus packages. But the story does not end here. 'Occupy' campaigns and 'The Indignants' have gained momentum and are a reflection of a popular public discontent brewing against Capitalism and are turning out to be the greatest build up ever against Capitalism.
All this surely suggests one thing - Capitalism in its current form can't continue or rather won't be allowed to continue. The glory days of yore when capitalists were untamed beasts will soon give way to days of suspicion, supervision and social responsibility - all so uncharacteristic of Capitalism !
Capitalism - The oldest of the troika, conceptualized perhaps in second half of the 19th century, gained prominence in early 20th century, broadly signifies that means of production are privately owned and the investments are made with sole aim of deriving maximum profits out of them. Despite its fallacies and being challenged by Communism, it thrived. It was the Great recession of 2008-09 which finally shook the very foundations of Capitalism - the concept of a free market economy and that of Laissez Faire. In the world's foremost free economy, where prices were supposedly determined by supply and demand and on rational behavior of market participants - it led to creation of asset bubbles which when burst, brought the whole economy to a standstill. Similarly, laissez-faire - the concept of minimal government intervention in the markets - was conveniently and blatantly forgotten when businesses facing pressing needs for capital were bailed out by the sovereign by pumping in trillions of dollars through stimulus packages. But the story does not end here. 'Occupy' campaigns and 'The Indignants' have gained momentum and are a reflection of a popular public discontent brewing against Capitalism and are turning out to be the greatest build up ever against Capitalism.
All this surely suggests one thing - Capitalism in its current form can't continue or rather won't be allowed to continue. The glory days of yore when capitalists were untamed beasts will soon give way to days of suspicion, supervision and social responsibility - all so uncharacteristic of Capitalism !
Consumerism - The genesis of Consumerism lay somewhere in Capitalism. Capitalism needed public consumption to sustain the vulgar profits and Consumerism - which thrives on ever increasing desire for buying more goods and services - was a perfect ally! As a result, Consumerism was born sometime during middle of 20th century and very soon it engulfed the whole world. The flood of options available in super markets and the hype of artificial low prices created though 'Sales', fomented the desire to buy more and led to patterns of irrational buying. People started to live beyond their means. All was seemingly well when Alas ! one day, the great recession struck. Governments tried their best to boost the economies but when the stimulus did not achieve the desired resuts, govts. had to resort to severe austerity measures. The severe austerity measures effectively translated into lower wages, lower pensions, lower health care and other benefits but more taxes. The 'Consumers' suddenly realized that in their quest for endless consumption, they had not saved enough for the rainy day! In some other parts where the stimulus did work (India & China), sudden downpour of money (and other factors) led to unprecedented inflation levels (not as those experienced by Zimbabwe but historically higher).
As people all over the world start redesigning their budgets to suit their wallets, the consumer in them will no longer be the same - profligacy will give way to frugality; irrationality will be replaced by cautiousness.
As people all over the world start redesigning their budgets to suit their wallets, the consumer in them will no longer be the same - profligacy will give way to frugality; irrationality will be replaced by cautiousness.
Globalization - The phenomenon of Globalization seems a logical evolution to Capitalism and Consumerism. Focus on profits; to sustain them - enable voracious consumption and when markets in your country are saturated, just spread the malaise - globalize it ! Defined as an integration of economic, political and cultural systems across the globe, globalization - the youngest of the triad, took centre-stage by the end of the 20th century. Advancements in communications and ease of travel fueled it. Free trade zones, various economic and monetary unions, relaxed immigration policies diminished national boundaries further. An example of globalization often quoted was that a person in India, uses equipments made in China, to communicate with an American, helping him how to boot his laptop, which was assembled in Malaysia and was shipped to him in a box, which has some elements of the Brazilian Amazon forests in it. But soon, it was realized that this integration has left the world economies susceptible as never before. Now, the bitter fruits nurtured due to the misadventures of one or a few (US earlier and PIIGS lately), have to be tasted by all. The example of globalization that can now be given is perhaps how the inability of an American to pay his mortgage made an Indian textile mill worker unemployed! As a corollary, it also brought Greece dangerously close to being ousted from Eurozone and has kindled a million mutinies in the form of OWS and The Indignants.
Thus, lately we see people in monetary unions questioning why they should be paying for someone else's folly; concept of open borders giving way to increased protectionism; stalemate in WTO (the organization which was at fore front of promoting globalization by reducing trade barriers) meetings as no one is prepared to recede ground. Some scholars even argue that globalization is actually promoting neocolonialism!
Thus, lately we see people in monetary unions questioning why they should be paying for someone else's folly; concept of open borders giving way to increased protectionism; stalemate in WTO (the organization which was at fore front of promoting globalization by reducing trade barriers) meetings as no one is prepared to recede ground. Some scholars even argue that globalization is actually promoting neocolonialism!
Lord Krishna says in Bhagvad Gita," Parivartan sansaar ka niyam hai". Everything that is created must be destroyed. Without destruction there would be no creation. Capitalism, Consumerism and Globalization - the phenomena that shaped most of the 20th century are currently in a state of flux as the happenings world over threaten to destroy the foundations they were based upon. What, however remains to be seen is that whether the destruction this time, will take us back in history and the concept of nation states with strong economic, cultural and social identity regains prominence. Or is this destruction, actually a creative destruction, which will lead to better, evolved and more open and matured philosophies?
Either way, it's time for Change ! Time for a RESET!
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